Rising property values are making more homeowners more optimistic about renovating their homes, and Millennial homeowners in particular favor using HELOCs to help them finance their designs, a new study by TD Bank showed.
TD's survey of 1,350 homeowners throughout December and January showed that 56 percent of American homeowners believe the value of their home has increased enough to finance renovation projects, while nearly 60 percent of homeowners would use a home equity line of credit for renovations primarily in kitchens and baths.
HELOCs, the survey found, are especially attractive to Millennials, who were noticeably more eager to apply for or already have such financing than Gen-Xers and Baby Boomers. According to the survey, 53 percent of Millennials would like to use a HELOC to fix up their homes, while 30 percent are interested in applying for one. Comparatively, 16 percent of Gen-Xers and 12 percent of Boomers said they would want to take on a HELOC.
Millennials, however, simply seem more able to understand what a HELOC does and what to do when a HELOC’s 10-year draw period comes to an end, the survey found. Only 9 percent of Millennials reported not fully understanding what effects a HELOC's expiration will have on monthly payments, while a whopping 63 percent of Boomers reported having the same lack of understanding.
Additionally, more than half of Boomers said they have no plans for their post-HELOC finances, while a mere 6 percent of Millennials reported the same.
Mike Kinane, SVP of home equity at TD Bank, said the new data is an optimistic‒‒and welcome‒‒response to home investment after almost a decade of caution and concern.
"Consumers have been reluctant to start home renovations in recent years because of all the uncertainties in the economy," Kinane said. "It's encouraging to see a growing appetite for these projects."